Aboriginal AFL player and anti-racism campaigner Adam Goodes has been named the 2014 Australian of the Year.

Prime Minister Tony Abbott presented Goodes with the award at a ceremony on the lawns outside Parliament House attended by a large crowd of dignitaries and fellow award finalists.

Goodes, a Sydney Swans legend and dual AFL premiership winner, was chosen from a diverse field of nominees that represented the scientific and medical communities, the arts and community groups.

According to the National Australia Day Council, Goodes was chosen "for his leadership and advocacy in the fight against racism both on the sporting field and within society - a stance which has won him the admiration and respect of people around Australia".

The two-time Brownlow Medallist won recognition last year for his stance against racism after a 13-year-old girl called him an "ape" during an AFL game at the MCG.

Australian of the Year awards

Australian of the Year: Adam Goodes

Senior Australian of the Year: Fred Chaney

Young Australian of the Year: Jacqueline Freney

Australia's Local Hero: Tim Conolan

Describing the Australian of the Year award as "a huge honour" for "doing stuff that I love and [believe in]", Goodes said his early experiences with racism had shaped his outlook and spurred his interest in advocacy work.

"Whilst it has been difficult a lot of the time, it has also taught me a lot and shaped my values and what I believe in today," he said during his acceptance speech.

"I believe racism is a community issue which we all need to address and that's why racism stops with me.

Adam Goodes (NSW)

"There are always two ways we can look at a situation. We can choose to get angry or not. We can choose to help others or not, or choose to be offended or not. We can keep our silos or educate ourselves and others about racism and minority populations."

Goodes urged fellow Australians to take a broader view of race relations, and also to treat "people the way you want to be treated".

"It is not just about taking responsibility for your own actions, but speaking to your mates when they take out their anger on their loved ones, minority groups, or make racist remarks," he added.

"It is about how you choose to give back and make a difference to those around you, your community or your country, that goes outside of just yourself. I believe we are all connected whether we like it or not. We are all equal and the same in so many ways. My hope is that we as a nation can break down the silos between races, break down those stereotypes of minority populations, Indigenous population and all the other minority groups."

Describing himself as "a very proud Indigenous man from Adnyamathanha tribe" and proud to be an Australian, he said: "I'm not here to tell you what to think or how to act or raise your children. All I'm here to do is to tell you about my experiences and hope you choose to be aware of your actions and interactions so that together we can eliminate racism."

Goodes holds an esteemed place in AFL history having won two premierships with the Sydney Swans.

The 34-year-old is also a four-time All-Australian member of the Indigenous Team of the Century, and has represented Australia in the International Rules Series.

However, he is also seeking to make a difference for his people, particularly troubled youths, with whom he has worked in detention centres.

He runs a foundation with his cousin and former teammate Michael O'Loughlin that aims to assist young girls and boys to get an education and a job, and also promotes healthy lifestyles.

He concluded his speech by urging his compatriots to have "a great Australia Day".

A lifetime dedicated to reconciliation

In being named Senior Australian of the Year, Fred Chaney, 72, was recognised "for his commitment to reconciliation and human rights", the council said.

A founding co-chair of Reconciliation Australia, which promotes ties between Aboriginal and Torres Strait Islander peoples and the broader Australian community, Mr Chaney was an early advocate for Aboriginal voting rights in 1961.

He was also instrumental in the 1967 referendum that saw more then 90 per cent of eligible Australians vote "yes" to count Aboriginal and Torres Strait Islander Australians in the national census and to give the Commonwealth Government power to make specific laws for Indigenous people.

The former lawyer entered the Senate in 1974 and went on to become federal minister for Aboriginal affairs.

Among his other achievements are the establishment of the Aboriginal Legal Service of Western Australia and the Graham (Polly) Farmer Foundation, which supports Indigenous young people to reach their potential.

The Australia Day Council said Mr Chaney's long history of public service was "rooted in his fierce commitment to social justice and a belief in the inherent equality of people".

"Fred's decades of hard work in support of often marginalised people has never faltered," the council added.

"In all his leadership roles, Fred inspires others to work collaboratively, respectfully and ambitiously to overcome the barriers that inhibit people's full economic and social participation in Australian society."

Just a girl who loved to swim

Young Australian of the Year Jacqueline Freney won eight gold medals at the 2012 Paralympics in London, becoming Australia's most successful Paralympian at a single Games.

The 21-year-old swimmer won a gold medal for every event in which she competed, and her gold medal haul was greater than any other competitor from any country.

Two of her performances were under world record time, with her success earning her the title of Australia's 2012 Paralympian of the Year.

According to the council, Ms Freney's success and "indomitable spirit" were not, however, confined to the swimming pool.

Working with Swimming Australia as a motivational speaker to help other people with disabilities reach their potential, Ms Freney has become "an inspirational role model and positive proof that, with hard work and determination, anything is possible," the council said.

Describing the award as her proudest moment as an Australian, Ms Feeney thanked her supporters and said she hoped her experience could inspire others.

"With all of you behind me, I was able to achieve anything and everything, but please understand I'm just a girl who has strived to be the best at what I can be at what I love - swimming," she said.

"I ask that all Australians respect each other's diversity and acknowledge their ability to contribute to this great country.

"I truly hope that through my sporting achievements I inspire other young Aussies to follow their dreams, and if I can spark a dream in a special child's heart and give hope to their family, I will have achieved my greatest award."

Helping sick kids when they need it most

Tim Conolan, of Melbourne, established the charity TLC in 1988 to help children in hospital and undergoing medical treatment, and through the organisation now helps more than 4 million sick children and their families, earning him the title of Australia's Local Hero.

Mr Conolan set up the charity with his long-term partner, Ana, after attending a cancer support group camp as a motivational speaker, using what the council described as his "passion and an infectious positivity".

Mr Conolan was instrumental in developing the TLC's national Distraction Box program, using therapeutic toys and items used by healthcare professionals to guide children through frightening and painful procedures.

Preliminary research suggests the toys and items reduce procedure time and hospital waiting lists.

"Tim's mission is to ensure every child in every hospital in Australia has the emotional and practical support they need," the council said.

Prime Minister hails 'extraordinary' group of Australians

At a Parliament House reception on Saturday morning, Mr Abbott described the group as representing the very best of Australia and indicative of the nation's diversity.

"We have an amazing range of extraordinary, dedicated, committed, passionate, achieving people here in this courtyard this morning," he said.

"Where else could you find an award where finalists include footballers, ballet dancers, cancer researchers, singers and songwriters?

There are always two ways we can look at a situation. We can choose to get angry or not. We can choose to help others or not, or choose to be offended or not.

Adam Goodes, Australian of the Year

"The genius and the wonder of our country is found in our people, in every part of our country, in every part of our life and you collectively reflect the very best of our country."

The Australian of the Year Award recipients were selected from more than 3,000 nominations submitted by the public.

National Australia Day Council chairman Adam Gilchrist paid tribute to the finalists as "an extraordinary group of Australians who represent their states and territory with distinction and who show us all what is possible in our country".

He added: "In Adam, Fred, Jacqueline and Tim we have fellow Australians who live their values every day, who have achieved great success and also use their success to help others and make a difference. They inspire us to be better Australians and their contributions make Australia a better place to live."